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Guide · TDS

TDS on Rent — Rate, Rs 6 Lakh Limit & Who Deducts

The TDS rate on rent for businesses (Section 194I) and individuals (Section 194IB), the new Rs 6 lakh annual threshold, the 20% no-PAN rate, and exactly how to deduct, deposit and file it.

Written by
TaxClue Income-Tax Desk
Updated
18 August 2026
Reading time
5 min
Questions
15 answered
  • Updated August 2026
  • CA Reviewed
  • Budget 2025 Threshold
Quick Answer

TDS on rent is deducted at 10% on rent of land, building or furniture and 2% on plant & machinery by businesses and audited entities under Section 194I — but only once total rent to one landlord crosses Rs 6,00,000 a year (raised from Rs 2.4 lakh by Budget 2025, w.e.f. 1 April 2025). Individuals and HUFs not under tax audit deduct 2% under Section 194IB when monthly rent exceeds Rs 50,000. If the landlord gives no PAN, deduct at 20%.

What changed in FY 2025-26

Budget 2025 raised the Section 194I annual threshold from Rs 2,40,000 to Rs 6,00,000 (effectively Rs 50,000/month) with effect from 1 April 2025. Separately, the Section 194IB rate for individuals/HUF was cut from 5% to 2% from 1 October 2024. The Income-tax Act, 2025 consolidates these rent-TDS provisions (AY 2026-27 onwards) but keeps the same rates and limits.

At a glance

TDS on Rent — Rate & Threshold Table

Who deducts, at what rate, and the threshold that triggers TDS. Rent for quarterly TDS return purposes is the amount excluding GST when GST is shown separately.

Payment / DeductorSectionThresholdTDS RateTAN?
Rent of land, building or furniture — by business / audited entity194IRs 6,00,000 / yr10%Yes
Rent of plant & machinery — by business / audited entity194IRs 6,00,000 / yr2%Yes
Rent paid by individual / HUF (not under tax audit)194IBRs 50,000 / month2%No · use PAN
Landlord does not furnish PAN194I / 194IBAs above20%—

Section 194I threshold raised to Rs 6,00,000/yr w.e.f. 1 Apr 2025 (Budget 2025); 194IB rate reduced to 2% w.e.f. 1 Oct 2024. Deduct on rent excluding GST if GST is shown separately.

Which section applies

Section 194I vs Section 194IB

The section depends on who is paying the rent, not the property. A business or a person under tax audit uses 194I; an ordinary individual or HUF uses the simpler 194IB.

194I

Section 194I — businesses

  • Deductor: company, firm, or individual/HUF under tax audit
  • Rate: 10% building/land/furniture, 2% plant & machinery
  • Threshold: Rs 6,00,000 rent per year (per landlord)
  • TAN mandatory; deduct at credit or payment, whichever earlier
  • File quarterly TDS return (Form 26Q)
194IB

Section 194IB — individuals

  • Deductor: individual / HUF NOT under tax audit
  • Rate: 2% (reduced from 5% since 1 Oct 2024)
  • Threshold: rent over Rs 50,000 per month
  • No TAN needed — deduct using PAN
  • Deduct once a year (or on vacating) via Form 26QC
Common mistake — deducting on the whole year unnecessarily

Under 194IB, TDS is deducted only once a year — in the last month of the financial year or the month you vacate — not every month. It is charged on the full annual rent (at 2%), capped so it does not exceed the last month's rent. Do not deduct monthly, and do not apply for a TAN — your PAN is enough.

Business paying rent above Rs 6 lakh? Get your TDS and Form 26Q handled.

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Step by step

How to Deduct & Deposit TDS on Rent

  1. 1Get TAN / PANTAN for 194I; PAN is enough for 194IB
  2. 2Deduct TDSAt credit or payment, whichever is earlier
  3. 3DepositBy 7th of next month (194I) via Challan 281
  4. 4File returnForm 26Q (194I) / Form 26QC (194IB)
  5. 5Give certificateForm 16A / 16C to the landlord
  • Landlord's PAN collected (else 20%)
  • TAN obtained (194I deductors)
  • Rent split from GST on the invoice
  • TDS deducted at correct rate (10% / 2%)
  • Challan 281 / 26QC paid on time
  • Quarterly Form 26Q filed (194I)
  • Form 26QC filed within 30 days (194IB)
  • Form 16A / 16C issued to landlord
  • TDS reflects in landlord's 26AS / AIS
Interest & disallowance for missing TDS

Fail to deduct and interest runs at 1% per month; deduct but do not deposit and it is 1.5% per month. For businesses, 30% of the rent expense can be disallowed under Section 40(a)(ia) until the TDS is paid. Late filing of the TDS return also attracts a Rs 200/day fee under Section 234E.

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Compliance

Forms, Due Dates & Certificates

DeductorDeposit dueReturn / statementCertificate
Business (194I)7th of next monthForm 26Q — quarterlyForm 16A — within 15 days of return due date
Individual / HUF (194IB)Within 30 days of month-endForm 26QC — challan-cum-statementForm 16C — within 15 days of Form 26QC
No PAN (any)Same as aboveSame as aboveDeduct at 20%

194IB deduction is made in March (or the month of vacating) and Form 26QC is due within 30 days of that month-end.

✓You must deduct TDS on rent if

  • You are a business/audited entity paying > Rs 6,00,000 rent/year to a landlord
  • You are an individual/HUF paying > Rs 50,000 rent per month
  • The payment is for use of land, building, furniture, plant or machinery

!No TDS needed if

  • Total annual rent is Rs 6,00,000 or below (194I)
  • Monthly rent is Rs 50,000 or below (194IB)
  • A lower/nil deduction certificate (Form 13) is furnished by the landlord

TDS deducted on rent is credited against the landlord's tax and appears in their Form 26AS / AIS, adjusting their final income-tax return liability. See the full TDS return filing guide for return timelines.

Sources
  1. Sections 194-I / 194-IB & rates: incometax.gov.in
  2. Form 26QC / 26AS: tin-nsdl.com (Protean)
  3. 194I threshold Rs 6,00,000: Finance Act 2025 (w.e.f. 1 Apr 2025)
  4. 194IB rate 2%: Finance (No. 2) Act 2024 (w.e.f. 1 Oct 2024)

Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.

People also ask

TDS on Rent — Frequently Asked Questions

Short, direct answers to the 15 questions readers ask most on this topic.

Under Section 194I (businesses and audited entities), TDS is 10% on rent of land, building or furniture and 2% on rent of plant and machinery. Under Section 194IB (individuals and HUFs not under tax audit), the rate is 2%. If the landlord does not provide a PAN, TDS is deducted at 20% in all cases.

For Section 194I, TDS applies once the aggregate rent to a single landlord exceeds Rs 6,00,000 in a financial year — raised from Rs 2,40,000 by Budget 2025, effective 1 April 2025. For Section 194IB (individuals/HUF), TDS applies when the monthly rent exceeds Rs 50,000. Below these limits, no TDS is required.

Yes. Finance Act 2025 raised the Section 194I annual threshold from Rs 2,40,000 to Rs 6,00,000 with effect from 1 April 2025 (FY 2025-26). This means businesses only deduct TDS once yearly rent to one landlord crosses Rs 6 lakh, i.e. effectively about Rs 50,000 a month. The Rs 50,000/month trigger for individuals under Section 194IB is unchanged.

No — and from FY 2025-26 the Section 194I limit is even higher at Rs 6,00,000 a year. If the total rent paid to a landlord during the year does not cross the applicable threshold (Rs 6 lakh/year for 194I or Rs 50,000/month for 194IB), no TDS needs to be deducted at all.

Section 194I applies to businesses, companies, firms and individuals/HUF under tax audit paying rent above Rs 6,00,000/year — rate 10% (2% for plant & machinery), TAN mandatory, quarterly Form 26Q. Section 194IB applies to individuals/HUF not under tax audit paying rent above Rs 50,000/month — rate 2%, no TAN needed, filed via Form 26QC once a year.

Yes. A salaried individual (not liable to tax audit) who pays monthly rent above Rs 50,000 must deduct TDS at 2% under Section 194IB. No TAN is required — the tenant uses their PAN and files Form 26QC. The deduction is made once a year, usually in March or when the tenancy ends.

Once a year, not monthly. Under Section 194IB the tenant deducts TDS in the last month of the financial year, or in the month they vacate the property, on the total annual rent at 2%. The TDS is capped so it does not exceed the rent for the last month. Form 26QC is then filed within 30 days of that month-end.

It depends on the section. Under Section 194I (businesses/audited entities) a TAN is mandatory. Under Section 194IB (individuals/HUF not under audit) no TAN is needed — you deduct and deposit using your PAN through Form 26QC. Applying for a TAN unnecessarily is a common error for individual tenants.

No. TDS on rent is deducted on the rent amount excluding GST, provided the GST component is shown separately on the invoice or agreement (CBDT Circular 23/2017). If GST is not separately indicated, TDS is deducted on the whole amount.

If the landlord does not furnish a valid PAN, TDS must be deducted at 20% instead of the normal 10% or 2%, under Section 206AA. Always collect the landlord's PAN before paying rent, and verify it, to avoid deducting at the higher rate and to ensure the credit reaches the landlord's account.

On the whole rent, not just the amount above the threshold. Once the applicable threshold (Rs 6,00,000/year for 194I or Rs 50,000/month for 194IB) is crossed, TDS is charged on the entire qualifying rent — there is no basic exemption slice that stays TDS-free.

Businesses deducting under Section 194I report rent TDS in the quarterly Form 26Q (non-salary TDS) and issue Form 16A to the landlord. Individuals/HUF deducting under Section 194IB file Form 26QC — a challan-cum-statement — within 30 days of the end of the month of deduction, and issue Form 16C to the landlord.

For Section 194I, TDS must be deposited by the 7th of the month following deduction (30 April for March). For Section 194IB, the tenant pays via Form 26QC within 30 days of the end of the month in which the deduction was made. Late deposit attracts interest at 1.5% per month.

Non-deduction attracts interest at 1% per month; deducting but not depositing attracts 1.5% per month. For businesses, 30% of the rent expense can be disallowed under Section 40(a)(ia) until the TDS is paid. Late filing of the TDS return also carries a Rs 200 per day fee under Section 234E, capped at the TDS amount.

Yes. A landlord expecting income below the taxable limit can apply to the Assessing Officer in Form 13 for a lower or nil TDS certificate under Section 197. The tenant then deducts at the reduced rate specified in the certificate. Without such a certificate, the standard rate (10% / 2%) or 20% for no-PAN applies.